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Optimal Dynamic Allocation of Attention

Mierendorff, JK; Che, Y-K; (2019) Optimal Dynamic Allocation of Attention. American Economic Review , 109 (8) pp. 2993-3029. Green open access

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Abstract

We consider a decision maker (DM) who, before taking an action, seeks information by allocating her limited attention dynamically over different news sources that are biased toward alternative actions. Endogenous choice of information generates rich dynamics: The chosen news source either reinforces or weakens the prior, shaping subsequent attention choices, belief updating, and the final action. The DM adopts a learning strategy biased toward the current belief when the belief is extreme and against that belief when it is moderate. Applied to consumption of news media, observed behavior exhibits an “echo-chamber” effect for partisan voters and a novel “anti echo-chamber” effect for moderates.

Type: Article
Title: Optimal Dynamic Allocation of Attention
Open access status: An open access version is available from UCL Discovery
Publisher version: https://www.aeaweb.org/articles?id=10.1257/aer.201...
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Wald sequential decision problem, choice of information, own-biased and opposite-biased learning strategies, limited attention.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10066889
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